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Flipkart and Swiggy on Friday denied any wrongdoing, two days after Income Tax (I-T) officials surveyed their premises over alleged tax irregularities of their third-party vendors.

A government official had on Thursday said the surveys were in connection with alleged wrongful input tax credit.

“This (allegations of fraud and tax evasion) is factually incorrect and we vehemently deny any allegation. The investigation by the GST Authority is on the alleged GST default by two manpower service providers of InstaKart and should not be misconstrued as being related to any wrongdoing by us. As required by the GST Authority, we have participated in the investigation proceedings and submitted several documents and information in relation to the investigation," e-commerce company Flipkart said.

For Flipkart, the vendors are resource management and staffing solution companies Merlin Facilities Pvt. Ltd and Surya Team Management Pvt. Ltd, which allegedly evaded taxes through bogus input tax credits. The promoters of both companies have fled the country, said one of the two people, requesting anonymity.

As per its website, Merlin Facilities, which caters to recruitment and staffing needs of companies, claims to have more than 50 clients, including Flipkart, Myntra, Swiggy and Hyatt and Taj Sats.

Merlin had in the past also worked with B2B marketplace Udaan as well as fresh supply-chain startup Ninjacart.

On Wednesday, about 25 I-T officials visited Flipkart’s office at Embassy TechVillage in Bengaluru to survey payments made by one of its group companies, InstaKart Services Pvt. Ltd, to these third-party vendors.

The Income Tax department completed its survey of InstaKart on Thursday, the second person said.

“Our transactions with these service providers are based on the valid GST Registration Certificate issued to them by the department, associated PAN, ROC records of the service providers, due diligence reports, service agreements, attendance records of the manpower employed by InstaKart and GST invoices that have been paid through banking channels. Our actions are within legal framework of the tax and legal requirements and we are committed to supporting the Authority as they complete this investigation," said Flipkart.

In December, InstaKart had filed an instant writ petition in Delhi high court against the Directorate General of GST Intelligence, alleging that the latter was coercing it to pay GST, which was not deposited by its suppliers—Merlin Facilities and Surya Team Management.

In its petition, InstaKart claimed that it has paid GST worth 20.12 crore to vendors against the tax invoices issued to it, in compliance with GST laws.

I-T officials also visited the offices of food delivery company Swiggy, wrapping up their survey on Friday.

“Swiggy strongly denies the allegations that it has been complicit in any wrongdoings by Greenfinch with respect to both it being a fictitious entity and availing bogus input tax credit. We further deny all the baseless and inaccurate statements in relation to this matter," Swiggy said. In November 2019, as a result of an investigation by the GST Intelligence wing into alleged non-payment of GST by Greenfinch, a GST survey was done at the Swiggy office to help the authorities with their findings. Swiggy fully cooperated with the authorities, it added in a statement.

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